LONDON, September 22, 2011 /PRNewswire/ --
Global markets tumbled today after the Federal Reserve announced 'Operation Twist', a move designed to lower long term borrowing costs, as investors were left reeling from a sharply negative tone and guidance over the headwinds facing the US economic recovery.
In a widely expected move, the US Fed has announced that it would sell $400bn of short term Treasury bonds and re-invest them into longer term debt in an effort to lower longer term borrowing costs.
The reaction to the move has been a sharply negative one thus far. After the announcement, the Dow Jones fell 2.3% to close on its lows, whilst Asian indices fell between 2% and 4.8% respectively and this locked in a very negative start for European indices as a result.
The FTSE 100, DAX and CAC all quickly floundered upon market opening, falling well over 3% with resource and insurance stocks suffering in particular, and closely followed by major banks.
Moreover, with the FTSE VIX, a gauge of fear in the market, rising 10%, and the US VIX rising 13% yesterday, clearly investor appetite for risk has taken a bit of a battering since the Fed decision.
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What is the FTSE 100?
The FTSE 100 is a weighted index of the highest-performing 100 companies on the London Stock Exchange. Together, these 100 companies represent about 80% of the stock market's entire value. The higher a company's market capitalisation, the greater influence it has on where the FTSE moves. Trading starts at 08:00 and continues until 16:30 (UK time) when the closing auction begins, with closing values taken at 16:35.
What influences its movement?
By their nature, FTSE 100 companies are the largest in the UK. Consequently both domestic and international news activity can have a bearing on their price movements.
At the same time, large companies tend to experience less volatility than smaller ones. While this reduces your profit potential in trading, it also lowers the chances of a dramatic price swing catching you by surprise.
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Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.
As a group, we transact in excess of 1.5 million trades every month in over 50 countries. We provide access to a wide range of instruments including margined foreign exchange, CFD trading and, in the UK, spread betting.
We constantly look to improve the performance of our platforms and expand the range of services we provide. The result is that our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer support. For more information, visit http://www.cityindex.co.uk/.
SOURCE City Index